Wal-Mart Responds To China's Allegations It Circumvents Quality Control Processes

HONG KONG (Reuters) - U.S. retailer Wal-Mart Stores Inc
<WMT.N> said on Wednesday it will upgrade its vendor
compliance process in China, requiring more documentation
and making use of a computer-based system to help suppliers
manage associated paperwork.

The announcement came after state-owned China Central
Television (CCTV) criticized the world's No. 1 retailer for
circumventing its quality control process and fast-tracking some
products with higher profit margins.

Wal-Mart will "ensure the correct documents and other
required items are in place before the products are sold in our
stores," the retailer said in a statement.

Documentation includes labels that accurately reflect
ingredients, government test reports, China Compulsory
Certificates, sample products or photographs, copies of
manufacturing permits, details substantiating health claims and
claims such as "organic" and "world-famous", official barcodes
and papers on intellectual property.

"This process requires the collection, organization, filing and
retention of well over one million documents annually," the
company said.

"Wal-Mart China has now invested in a computer-based system
enabling vendors to upload all required legal documents. This
system was piloted in September of 2013 and is now ready for
broad-based application across the supply chain."

Wal-Mart, which operates more than 400 stores and warehouses
in China, said immediately after the CCTV report last week
that it keeps a close watch over its supply chain.

It said it only uses its expedited special approvals process in
specific circumstances such as when a supplier changes the size
of a product or switches distribution agents.

In the statement on Wednesday, the company explained additional
steps it would take to address supply chain concern.

Wal-Mart is the latest in a series of foreign companies CCTV
has taken to task on issues ranging from pricing to poor quality
products and shoddy customer service.